"Fools!" laughed Bard, 'to come thus beneath the Mountain's arm! They do not understand war above ground, whatever they may know of battle in the mines. There are many of our archers and spearmen now hidden in the rocks upon their right flank. Dwarf-mail may be good, but they will soon be hard put to it. Let us set on them now from both sides, before they are fully rested!"

But the Elvenking said: "Long will I tarry, ere I begin this war for gold. The dwarves cannot pass us, unless we will, or do anything that we cannot mark. Let us hope still for something that will bring reconciliation. Our advantage in numbers will be enough if in the end it must come to unhappy blows."

BARD: Wait! Please, wait! You would go to war over a handful of gems?

THRANDUIL: The heirlooms of my people are not lightly forsaken.

BARD: We are allies in this. My people also have a claim upon the riches in that mountain! Let me speak with Thorin!

THRANDUIL: You would try to reason with a dwarf?

BARD: To avoid war? Yes!

That had never occured to me.

The idea the the gems are connected to his wife somehow is a stellar idea. I almost wish this had been alluded to, albeit in some subtle way. This way his perceived coldness is really some kind of attempt to find his own peace. It was also give his character arc some clarity. That's good stuff.

If Thranduil were portrayed as the kind and sensible king he was in the book, then the writers wouldn't have been able to portray their created character as the do-gooder counterpoint.

It might have been more interesting (and accurate) to have Bard start off more like Book Bard and Legolas be present for his evolution into Heir of Girion to mirror(contrast?) the Leggy/Aragorn relationship to come.

From LotR and UT we get a picture of a tormented, traumatized king. He’s been forced to watch helplessly as his kin are slaughtered, several times. His forest is being taken over by darkness. He’s isolated and withdrawn.

And yet… he’s out having parties in said forest. Which makes no sense, considering the state of Mirkwood.

Then, he goes marching towards Erebor with an army, even though he believes the dwarves are dead. He helps the people of Laketown, because he’s not heartless. Then an army of elves and men marches to the mountain - to fight off thieves? We’re never given a reason for the army’s presence, and there’s no one who would make it to Erebor before them.

Anyway, we get there, and Thranduil… suddenly steps down to support Bard. Says he won’t fight over gold (then why come with an army?). And, crucially, doesn’t understand the nature of dwarves at all - even though he’s had thousands of years of experience with dwarves, and not pleasant ones.

Thror expected Thranduil to “pay homage” to him. To pay homage means “a public show of respect or honor towards someone or something.” Thranduil arrives, and they both tilt their heads in respect. Thror then has the box containing the gems opened. Thranduil glances at Thror, before looking back at the gems, as he starts walking forward. He pauses before the box, greatly moved by the sight, before reaching forward. As soon as Thranduil's hand gets close to the box, it is slammed shut. Thranduil's eyes widen in shock, and Thorin looks at his grandfather, confused and surprised. Thror just looks at Thranduil, who looks up. They stare at each other, and Thranduil's mouth tightens. He turns and leaves.

No matter what Bilbo says, it’s actually quite clear. If it was a matter of payment, Thorin wouldn’t have been surprised. Nor would there have been any need to bait and toy with Thranduil. Thranduil's reaction to the gems shows that he cares greatly about them, something Thror had to be aware of. To be mocked and humiliated so publicly…

Bard is genuinely surprised at Thorin's behavior. Thranduil is not. That is why he has his army positioned so Thorin and the others can see that they are surrounded. And yet, he lets Bard try to talk it out anyway. When Bard comes back, Thranduil tries to comfort him in his own awkward way – you tried, it's not your fault. Bard asks why, and they both watch the dwarves prepare for war.

Thranduil says it's useless to reason and talk to the dwarves, that they only understand war. He draws out his sword and looks at it, probably remembering every time he tried to talk, first with Thror and then with Thorin. And he's right. Thorin will gladly make them all go to war. He's caught in dragon sickness, yes, but his actions in Mirkwood made it quite clear he wouldn't talk things out anyway.

The dwarves watch from the top of the barricade. Thorin shoots an arrow at the ground in front of Thranduil. Bard looks over in surprise, both stopping, and Thranduil looks from the spot back to Thorin, who yells, “I will put the next one between your eyes!” The dwarves cheer. Thranduil smirks, before looking serious. He nods his head down, his elves drawing their bows. The dwarves panic and hide, but Thorin does not. Bard looks at Thranduil, who raises his hand, signaling his soldiers to stand down.

Remember that "the Elvenking was very powerful in those parts" and "much wealth went up and down the Running River; and there was friendship in those parts between elves and dwarves and men." According to The Hobbit, Thranduil was a powerful figure in that part of Middle-earth.